"In addition, public access to beneficial ownership information can lead to more investigations by public authorities.
Public beneficial ownership registers can also serve other purposes. For example, businesses themselves find it useful to know the beneficial owners of companies they are dealing with so as to better manage risks and potential liability.
Our environment, human rights and social justice also benefit from greater transparency."
Shell companies are often a party (willingly or unknowingly) to the facilitation of corruption, money laundering, tax evasion, bribery and corruption, human trafficking, and drug smuggling. With such an extensive list of predicate offenses, one would assume that stricter regulations to govern loopholes within the AML/CFT regulations would be rigorously enforced and scrutinized. However, despite the prolific use of shell companies and their connectivity to both legitimate financial systems and criminal activities, there have been minimal efforts to mitigate their inherent risks in scale. The recent Ultimate Beneficial Ownership (UBO) rule enacted by FinCEN may help curb that risk, but only if implemented more effectively than other AML rules by financial institutions.
"Acting as strong deterrents, public registers will create an additional layer of protection for societies. Not only will they make it much harder for corrupt individuals to hide their criminal activities, but they will also prevent opportunistic behaviours that thrive on financial secrecy as the Panama and Paradise Papers revealed."
Legal persons are needed to operate complex businesses, collect capital and limit risks and the liability of individuals, they were never created as a tool to hide ownership in business or other enterprises. Individuals who create legal structures are actively choosing to benefit from them and take advantage of things like limited liability. In return for this it is legitimate to expect transparency around beneficiaries. Individuals could – if they wanted – trade in their own name and therefore avoid the public reporting obligations that come with legal structures. Although we do not deny the responsibility of public authorities for investigating money laundering and terrorist financing cases, we believe public access is necessary for efficient prevention and detection of criminal acts.